Notes to the Financial Statements
2. Summary of significant accounting policies (contd.)
2.3 Standards and interpretations issued but not yet effective
The Group has not adopted the following standards and interpretations that have been issued but not yet effective:
Effective for annual
periods beginning on
Description or after
Amendments to FRS 1 Severe Hyperinflation
and Removal of Fixed Dates for First-time Adopters 1 January 2012
Amendments to FRS 7 Transfers of Financial Assets 1 January 2012
Amendments to FRS 112 Deferred Tax: Recovery of Underlying Assets 1 January 2012
FRS 124 Related Party Disclosures 1 January 2012
Amendments to FRS 101 Presentation of Items of Other Comprehensive Income 1 July 2012
Amendments to FRS 1 Government Loans 1 January 2013
Amendments to FRS 7 Disclosures - Offsetting
Financial Assets and Financial Liabilities 1 January 2013
FRS 10 Consolidated Financial Statements 1 January 2013
FRS 11 Joint Arrangements 1 January 2013
FRS 12 Disclosure of interests in Other Entities 1 January 2013
FRS 13 Fair Value Measurement 1 January 2013
FRS 119 Employee Benefits 1 January 2013
FRS 127 Separate Financial Statements 1 January 2013
FRS 128 Investment in Associate and Joint Ventures 1 January 2013
IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013
Improvements to FRSs issued in 2012 1 January 2013
Amendments to FRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014
FRS 9 Financial Instruments 1 January 2015
The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements in the period of initial application, except as disclosed below:
Amendments to FRS 101 Presentation of Items of Other Comprehensive Income
The amendments to FRS 101 change the grouping of items presented in Other Comprehensive Income.
Items that could be reclassified (or “recycled”) to profit or loss at a future point in time (for example, upon derecognition or settlement) would be presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group’s financial position or performance.
FRS 9 Financial Instruments
FRS 9 reflects the first phase of work on the replacement of FRS 139 and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139. The adoption of this first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets but will potentially have no impact on classification and measurements of financial liabilities. The Group is in the process of making an assessment of the impact of adoption of FRS 9.
Notes to the Financial Statements
For the financial year ended 31 July 2012
2. Summary of significant accounting policies (contd.)
2.3 Standards and interpretations issued but not yet effective (contd.) FRS 10 Consolidated financial statements
FRS 10 replaces the portion of FRS 127 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. FRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by FRS 10 will require management to exercise significant judgement to determine which entities are controlled, and therefore, are required to be consolidated by a parent, compared with the requirements that were in FRS 127.
FRS 11 Joint Arrangements
FRS 11 replaces FRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-controlled Entities - Non- monetary Contributions by Venturers.
FRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation.
Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.
FRS 12 Disclosure of Interests in Other Entities
FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.
FRS 13 Fair Value Measurement
FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted. The Group is currently assessing the impact of adoption of FRS 13.
FRS 127 Separate Financial Statements
As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.
Amendments to FRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities
The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendment affects disclosure only and has no impact on the Group’s financial position or performance.
Amendments to FRS 132 Offsetting Financial Assets and Financial Liabilities
The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set off that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the net settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to net settlement.
Malaysian Financial Reporting Standards (MFRS Framework)
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).
Notes to the Financial Statements
For the financial year ended 31 July 2012
2. Summary of significant accounting policies (contd.)
2.3 Standards and interpretations issued but not yet effective (contd.) Malaysian Financial Reporting Standards (MFRS Framework) (contd.)
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional two years. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2014.
The Group falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 31 July 2015. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.
The Group has established a project team to plan and manage the adoption of the MFRS Framework.
The Group has not completed its assessment of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ending 31 July 2014 could be different if prepared under the MFRS Framework.
The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 July 2015.
2.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.
Acquisitions of subsidiaries are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments-related costs are recognised as expenses in the period in which the costs are incurred and the services are received.
In business combinations achieved in stages, previously held equity interests in the acquire are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate shares of the acquiree net identifiable assets.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identified assets and liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in Note 2.10. In instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.
Notes to the Financial Statements
For the financial year ended 31 July 2012
2. Summary of significant accounting policies (contd.)